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Minnesota Commerce Department: Line 3 replacement not needed

The Minnesota Department of Commerce has come out against the Enbridge Line 3 replacement, raising the stakes in an already contentious battle over the oil pipeline’s fate.

“In light of the serious risks and effects on the natural and socioeconomic environments of the existing Line 3 and the limited benefit that the existing Line 3 provides to Minnesota refineries, it is reasonable to conclude that Minnesota would be better off if Enbridge proposed to cease operations of the existing Line 3, without any new pipeline being built,” the agency wrote in testimony submitted to the Public Utilities Commission on Monday.

The testimony, written by Kate O’Connell, manager of the Energy Regulation and Planning Unit of the Department of Commerce, comes ahead of evidentiary hearings on the oil pipeline replacement that will see the project debated in a trial-like setting in November. A new round of public hearings across the state will kick off at the end of the month.

Enbridge wants to lay 340 miles of new pipe across Minnesota on its route from Alberta to the company’s terminal in Superior. The pipeline would carry 760,000 barrels of oil per day and take a new route across much of the state compared to the company’s other lines. The existing Line 3, which is about 50 years old and operating at half its original capacity, would be cleaned out and largely left in the ground.

Intervenors in the state’s permitting process — with some for and many standing against Line 3 — had to turn in initial testimony on Monday. Environmentalists and Native American tribes are fighting to stop the pipeline from going forward while Enbridge and its allies assert safety will be improved by replacing Line 3.

In a statement released late Monday, Enbridge responded that “the Department of Commerce opinion is only one view which we and other energy consumers will respond to in detail through this process. We’re confident in our evidence and we’re confident in the Minnesota regulatory process which requires weighing of all evidence by a judge followed by her recommendations to the Minnesota PUC.”

Commerce spokesman Ross Corson said that “unlike the environmental impact statement, which was an impartial fact-finding document,” the department and other stakeholders are now taking sides and making cases for or against the pipeline’s approval, which ultimately rests in the hands of the Public Utilities Commission.

An economic analysis by London Economics International included in Commerce’s testimony said that regional refineries “have been operating at high levels of utilization, which indicates both they are not short of physical supplies of crude oil, and that they have little room to increase total crude runs.”

The department also found the expansion of Line 67 from 500,000 to 800,000 barrels per day would meet the need claimed by Enbridge for Line 3.

Tribes and other self-described water protectors who have been actively protesting the pipeline in recent weeks cheered the agency’s testimony.

“The authorities are beginning to take into account things we have been saying all along — that this project doesn't make sense,” Korii Northrup of Cloquet told the News Tribune. “We feel Line 3 should be removed and the land restored.”

In other testimony filed Monday, environmental scientist Chris Joseph wrote on behalf of Friends of the Headwaters that “the evidence provided by Enbridge itself as well as industry authorities indicates that the project is not needed. Further, Enbridge has not provided nor demonstrated that the costs of the project are outweighed by the actual, incremental benefits of the project.”

Filing testimony in favor of the project, David Barnett of the United Association of Journeymen and Apprentices of the Plumbing and Pipe Fitting Industry wrote: "The Line 3 Replacement Project presents a significant opportunity for the creation of several different types of jobs within Minnesota as well as other economic benefits for the state and its residents."

For Shippers for Secure, Reliable and Economical Petroleum Transportation, Paul Kahler of Cenovus Energy wrote: “Failure to construct the project at full capacity would result in shippers continuing to be unable to ship volumes nominated to meet market demands. … Shippers would have to seek alternative transportation arrangements, including other pipelines and rail, to move their oil supply to markets.”

The $6.5 billion Line 3 replacement project is already under construction in Canada and Wisconsin. Enbridge wants the pipeline online by 2019, though a recommendation from the PUC is not expected until next spring.

Gov. Mark Dayton said in a statement Monday he will wait for the process to play out “before expressing my personal views.”

“I note that, under statute, the PUC is completely independent of my administration,” he added. “I am confident that it will make its decisions based upon all the evidence and its judgment about the best interests of all of Minnesota."

Republican state House of Representatives Speaker Kurt Daudt blasted the Department of Commerce findings in a countering statement.